Indian Real Estate Industry Analysis

November, 2017

India’s real estate market is expected to reach US$ 180 billion by 2020 from US$ 126 billion in 2015. Emergence of nuclear families, rapid urbanisation and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial and retail. Rapid urbanisation in the country is pushing the growth of real estate. More than 70 per cent of India’s GDP will be contributed by the urban areas by 2020. The private equity investments in Indian real estate have reached US$ 3.2 billion till September 2017 and are expected to cross US$ 4 billion by 2017 end. During Q3 2017, office leasing in India reached 10 million sq ft.

The Government of India has been supportive to the real estate sector. In August 2015, the Union Cabinet approved 100 Smart City Projects in India. The Government has also raised FDI limits for townships and settlements development projects to 100 per cent. Real estate projects within the Special Economic Zone (SEZ) are also permitted 100 per cent FDI. In Union Budget 2017-18, allocation of Rs 23,000 crore (US$ 3.57 billion) has been made for Pradhan Mantri Awaas Yojana – Gramin, with a target to complete 10 million houses by 2019 in rural areas. The government has also released draft guidelines for investments by Real Estate Investment Trusts (REITs) in non-residential segment.

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